For 2014, we are all still looking at the 12/31/13 expired tax breaks. A host of tax breaks lapsed on 12/31/13, mostly to business owners. At first, these provisions were supposed to be handled as part of the entire tax overhaul process, but that looks unlikely, and Congress has begun working on separate legislation that is devoted to the expired tax provisions.
Some of the key breaks are highly likely to be revived, retroactive to 1/1/14. For businesses, the key provisions would be 50% bonus depreciation, the ability to expense up to $50,000 of assets and the R&D credit. There will be plenty of politics and “tough talk” around not extending all 55 provisions, but that is most likely to die quickly and be just hot air.
The Senate wants to revive the expired tax breaks asap…but the House is on a much slower track. The Taxwriters in the House seem determined to debate each and every provision, and that will slow the process. As a result, it is more likely than not that we won’t know what provisions will be extended for 2014 until later on this year. However, it is likely that they will be extended through 12/31/15. Until then, we continue to play the guessing game until November/December of 2014.